There are some changes for Tax Year 2018 for holders of Montana Medical Savings Accounts.
- Increased Deduction Allowed
- For 2018, account holders can deduct up to $3,500, or $7,000 per couple.
- Each spouse must have his or her own account.
- New Contribution Limit Beginning in 2018
- Contributions to an MSA account are now capped at $3,500, the amount that is deductible on the 2018 Montana individual income tax return.
- This is a change from previous years when contributions could be more than the deductible amount.
- Special Rule for Prior-years’ Excess Contributions
- In 2018, and up until January 15, 2019, account holders with excess contributions from prior years may withdraw this excess from their MSA tax-free.
- Excess contributions are the total amount contributed before January 1, 2018 minus the total amount of contributions that were deducted on Montana returns. They do not include earnings.
- Taxpayers may choose to keep excess contributions in their account. However, starting in 2019, any withdrawal made to pay for ineligible expenses will be deemed to have been deducted in prior years and subject to recapture.
- New Eligible Expenses
- Beginning in Tax Year 2018, eligible expenses in addition to medical costs include:
- long-term care expenses;
- bank fees related to the administration of the account; and
- family leave expenses (withdrawals made to approximate wages lost for caring for an immediate family member.)
- Also, beginning in Tax Year 2018, eligible expenses include the medical costs of any individual. Withdrawals are no longer limited to the medical expenses attributed to the account holder and dependents.
Learn more about Medical Savings Accounts.